Lessons From The Summer Of 1944

On the 70th anniversary of the D-Day invasion, I am reminded of a trip to Normandy, France last summer. The beaches and acres of gravestones served as stark reminders of the magnitude of what the Allies achieved on the war front on June 6, 1944 and its related costs.

I am also reminded of another momentous achievement that occurred during the same summer by a different group of courageous men and women working on the economic diplomacy front – delegates from 44 countries who gathered in Northern New Hampshire to sculpt the Bretton Woods Agreement.

While the results of the Bretton Woods conference are well known, at the time we were not privy to its inner workings. Today, however, we are able to glean a number of new insights about what went into that iconic Bretton Woods Agreement and begin to understand just how bold and visionary the participants in the meetings truly were. This new perspective stems from the recent discovery of the conference transcripts in the basement of the U.S. Treasury building by my colleague and friend Kurt Schuler, a discovery for economic policy buffs that is akin to finding lost Beatles tracks at the Abbey Road studios for music aficionados.

An examination of The Bretton Woods Transcripts through the lens of what was achieved, by who, and how it is relevant today, demonstrates just how much we can learn from this achievement and why it should be essential reading for leaders around the world.

WHAT WAS ACHIEVED

The results of Bretton Woods cannot be understated. The delegates were able to come together and develop new rules for the international financial system, and give life to the International Monetary Fund (IMFIMF) and the World Bank (otherwise known as the International Bank for Reconstruction and Development, IBRD) – to this day two of world’s most important economic institutions.

Put quite simply, these economic policy leaders put into place an entirely new financial foundation for a world they envisioned would be filled with freedom, growth, and stability. Their tireless pursuit of a long-term strategic plan to secure a better future, despite the deep uncertainty on the battlefront, is remarkable.

WHO THESE DELEGATES WERE

The delegates at the Bretton Woods Conference were not only leaders, they were visionaries.

While delegates such as John Maynard Keynes, Harry Dexter White, Marriner Eccles, Henry Morgenthau, Dennis Robertson, and Lionel Robbins were instrumental in shaping the post-War financial architecture, The Bretton Woods Transcripts reveals the talents and influence of leaders outside of the US and UK. For instance, André Istel from the Free French Republic and Lewis Rasminsky from Canada were instrumental in charting rules for future exchange rates. Eduardo Suárez from Mexico led the third commission with Keynes and White orchestrating the other two. Similarly, Wilhelm Keilhau from Norway was an integral influence on how the IMF should lend to its members (or more aptly put, limit its lending).

Despite the obvious cultural differences and conflicting agendas of the assembled group, the delegates shared one key attribute – an understanding that what they were doing was bigger than every one of them and that the policies they would put in place were for the long term. Keilhau from Norway mused that “when we now formulate the policies and purposes of the Fund, we give a fundamental law which may be in effect for hundreds of years.”

In a world that is currently dominated by a slavish focus on quarterly earnings, the endless parsing of a few words uttered by the Federal Reserve Chairman, and countless polls by politicians attempting to channel popular opinion, the long-term vision these delegates exercised is a lesson to us all. Today’s leaders both in the US and abroad need to take note.

WHY BRETTON WOODS IS IMPORTANT

Economic fragilities after WW I set the stage for a period of profound turmoil in the run-up to WW II. John Maynard Keynes wrote a poignant essay entitled “The Economic Consequences of the Peace” where he chronicled how post-WW I reparations would destabilize the German economy. Unfortunately, his prediction was all too true.

The leaders behind the Bretton Woods Agreement despised the atrocities of war as well as the suppression of human rights around the world. One of their guiding principles, as revealed through The Bretton Woods Transcripts, is that a well-run global economy and financial system were essential components to helping prevent future world wars.

This linkage – between defense and economic policy – permeated the minds of the Bretton Woods visionaries. This concept, as well as the purpose of Bretton Woods overall, was articulated by Fred Vinson – a U.S. delegate and future Supreme Court Justice – when he passionately noted:

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